London property prices are fuelling a north-south wealth divide, according to the Centre for Cities think-tank
Homeowners in the south east have made £80,000 more from their houses than those in the north, according to a report that claims “broken” planning policy is widening England’s north-south wealth divide.
Housing wealth in Sunderland has increased by an average of just £3,000 per home since 2013 compared with £121,000 in Cambridge over the same period, according to figures analysed by the Centre for Cities think-tank.
In London, housing wealth has increased by £122,000 – an overall real terms increase in housing equity of £550bn since 2013 – more than every other city in England and Wales combined.
The think-tank is calling on the Government to think more critically about where new homes are built and says planning reform is needed to stop the “gifting” of wealth to homeowners in successful cities.
It says in many cities in the greater south east, where residents typically earn higher incomes, the “rationing of new homes” is driving up houses prices. Over two-thirds of overall growth in housing wealth has been in the greater south east, but it has delivered under half of all new homes.
The think-tank says the planning system should be reformed to ensure that housing supply meets demand in popular areas. Its report says housing shortages caused by planning failures have pushed up house prices in growing cities.
It adds that this drives housing equity growth for a few existing homeowners, fuels increasing housing costs for renters and first-time buyers, widens regional inequality, and destabilises the national economy and the financial system.
The chief executive of Centre for Cities, Andrew Carter said the planning system is fuelling a north-house wealth divide among homeowners. Restrictive planning policies in many prosperous southern cities are gifting wealth to homeowners in the greater south east.
Carter said this creates two wealth divides – one between homeowners in the greater south east and elsewhere in the country and another between homeowners and renters who tend to be younger.
He said that the best way to address this inequality is to build more homes in the areas that have seen the biggest increases in housing wealth. This means radical reform of the broken planning system.